CFPB: CARD Act Is Working But. . .

October 2, 2013 at 8:08 am 1 comment

If the Bureau was a creation of the twentieth century, we could all breathe a sigh of relief this morning.  The Bureau released the first of its Dodd-Frank mandated reports analyzing the CARD Act, which was passed in 2009, and the Bureau’s overall assessment is that the legislation has worked pretty much as Congress intended.  Specifically, credit card over limit fees, and arbitrary repricing of the cost of credit “have been largely eliminated”  because of the Act.  What’s more, young people are no longer getting solicitations for credit cards they cannot afford.

The credit card industry will never be perfect for the consumer protection champion, but with so many other regulations being imposed in the coming months, surely the overall effectiveness of the CARD Act means that credit unions can take their open-ended disclosure vendors off speed dial, at least for a while.

But alas, this regulator is not a relic of the twentieth century but a cutting edge regulator born in the twenty-first century dedicated to the proposition that every regulation impacting consumers should be rewritten to reflect the way it would have been promulgated had the CFPB been in charge.  So even though the CARD ACT has been generally successful, here are some of the issues highlighted by the CFPB that could ultimately impact credit union operations in the months or years ahead.

  • Portal transparency issues.  With more and more people paying their bills online, “it is unclear how easily the full set of required disclosures . . . could be translated into an online payment screen.”
  • Deceptive add-on products.  While the Bureau isn’t going to do away with add-on products such as debt and identity theft protection, it’s more than a little miffed, let’s say, at what it considers the deceptive way in which some of these products are advertised.  Be as clear as possible when advertising these additional services.
  • The dreaded grace period.  How well do you disclose your grace period?  For instance, do you explain if and when members are assessed interest between the beginning of a billing cycle and the date in which payment is due in full?

Now, I am not saying that the CFPB will be proposing new regulations in these areas tomorrow, but, let’s face it, for consumer advocates, the reworking of Regulation Z’s open ended lending regulations is the holy grail.  With the CARD Act, Congress went further than I ever thought it would in placing substantive restrictions on credit card issuers.  For the CFPB, these restrictions are a nice start, but I doubt they go far enough.

Entry filed under: Compliance, Regulatory. Tags: , , .

And The Band Played On Is Obamacare Good For Credit Unions and Bad For Their Employees?

1 Comment Add your own

  • 1. log house for sale in texas  |  July 12, 2014 at 12:04 am

    I’m curious to find out what blog platform you happen to be utilizing?
    I’m having some small security problems
    with my latest blog and I’d like to find something more
    safe. Do you have any suggestions?


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed

Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 474 other followers